Today’s nurse leaders play an important role in supporting the financial well being of their healthcare organizations. However, the demands of day-to-day clinical work don’t always afford them the opportunity to hone their financial skills.

As the chief nurse executive of the north region for the 14,000-employee Community Health Network in Indianapolis, Indiana, Pamela Hunt draws from her 17+ years’ experience as a nurse leader and administrator to enhance her peers’ financial management and operational planning prowess.

We recently spoke with Pam about the opportunities nurse leaders have to make a difference, both financially and operationally, within their organizations.

Part 1

Tell us a little about your career path. How did your education and career opportunities influence your perspectives on financial management?

My initial nursing education was from a 3-year diploma program school of nursing. Upon graduation I began working in a critical care unit. Within a couple of years I was back in school, completing a Bachelor’s degree in Science and later a MSN in nursing administration from Indiana University.

In the early 1990s, the 130-bed community hospital I worked for was evaluating ways to become more efficient. As a result, the hospital’s nursing leadership was beginning to look differently at their roles. I was asked to take on leadership of the operating room while continuing to lead the intensive care unit. At that time, it was uncommon to take over a unit you didn’t ‘grow up’ in; nurses were traditionally given new responsibilities based on their clinical performance.

When offered the OR leadership role I said to the VP, “I’ve never worked in the OR.” She said, “I’m not asking you to work there, I’m asking to lead that team.” So I accepted the OR director position, while also continuing as director of critical care unit. My leadership in the perioperative role continued for the next 15 years until I left the organization.

In 1998, the same hospital hired a consulting firm that was tasked to take $1.4 million out of the staffing budget. Because of having both OR and inpatient leadership experience, I was asked to work with the firm as the hospital’s internal productivity expert. At first I didn’t see this as a great opportunity because it required more hours on top of my ongoing jobs. But that nine-month experience turned out to be invaluable to the success of my department and to my career.

What motivates me is not creating/developing a budget or getting the budget right. What jazzes me is getting the right nurses at the bedside, emergency department cart or OR table, and having the right equipment and the right supplies to care for our patients.

Teaching feeds my desire to pass on information that can help other nurses and the organizations where they work. I use experiences throughout my career to help other nurses put their challenges in context and give them different ways to see a problem or approach a solution.

What are the key skills required of nurse leaders to effectively manage the financial performance of perioperative services?

As nurses, if we want to advocate for our patients in today’s healthcare environment, we need to learn this foreign language of finance. Only by understanding the financial aspects of the business can we protect those things that are most important and have a large impact on patient care.

Nurse leaders must clearly understand expenses and revenue. First, understand that gross charges don’t equal revenue for the hospital. Second, know your expenses . Third, understand and manage productivity in the work environment. As an example, know how to flex volume --because that’s where you’re going to attain staff productivity -- while maintaining the satisfaction of your team. Fourth, know how to maintain collaborative relationships with physicians to help drive out costs, especially in the OR.

Being a leader means knowing that you are not going to have all the answers. This makes it critical that you get the team involved in flagging problems and seeking ways to reduce waste. My goal is take expenses out of non-value added items. An example of involving the entire team is this: no one knows better than the staff who open custom packs everyday in the OR what wastes may be included in the pack that needs taken out because it’s no longer used but this has not been passed on to someone who can make those changes. Ask the team!

Let’s say a physician comes in and he/she wants to add an expense to a case, such as a new product. A nurse leader’s first answer is not “No”, but “Oh, this is a great product! Can you tell me if it decreases OR time or the patient’s length of stay?” “How does it benefit the patient’s outcome?” These are the quality measures. And then, a nurse leader should say, “Let’s look at the costs.” It could be a really good product at a higher cost with great benefits. So the cost is justified and we bring the new product in. I worked with an ob/gyn surgeon who wanted to bring in a disposable supply for a case. When the cost analysis was complete, I went back to him and said “We wanted you to be aware that this is going to increase your case cost by $X” upon which the doctor decided that the investment wasn’t worth it.

I tell nurses in my seminars that the decisions you make are not made between quality OR cost. All evaluations and decisions should continually factor in quality AND cost. Sometimes quality is not easily seen. We need to look at how the benefits of a higher-cost product affect all our customers: the patient, their employer, the insurance company, the third-party payer, and businesses in our community. It’s about digging deeper to get the answers.

In part two of our discussion with Pam, she will answer questions on why nurses need to learn about financial management, the evolving role of nurses and how nurses can impact the financial success at their hospitals.